What is a Product?

1. What is a Product? • Multidimensional, sum of all its features, bundle of utility

2. Product Component Model SUPPORT SERVICESCOMPONENT PACKAGING COMPONENT  Repair and maintenance  Deliveries 12-6 CORE COMPONENT  Trademark  Price  Product platform  Design features  Functional features  Legal  Warranty  Installation  Quality  Brand name  Package  Instructions  Spare parts  Legal  Styling  Other related services  Legal Irwin/McGraw-Hill

3. Product Marketing Decisions • Numerous • Affected by Environmental Factors • Affected by internal Strengths and Weaknesses

4. Types of Product Decisions (1) Product Positioning • Positioning refers to the act of locating a brand in customers’ minds relative to competitive products in terms of product attributes and benefits

5. Positioning Map: Automobiles For Generation Yers More “Edgy” Kia Sorrento Scion Cube Inexpensive Expensive $13k $20K Civic Less “Edgy”

6. Types of Product Decisions: (2) Product Mix Decisions • Def.: Set of all products and items that a particular seller offers to buyers. • Decisions include selection of width, length, depth, and consistency

7. Product Mix / Assortment E.g. P&G

8. (3) Product Line Decisions • A product line is a group of products that are closely related because they perform a similar function, are sold to the same customer groups, are marketed through the same channels • Decisions include Product Line length, modernization, featuring, pruning

9. (4) Brand Name A company’s unique designation or trademark, which distinguishes its offering from other product category entries

10. (5)The Logo • Graphic design element that is related to the brand name • Companies use logos with or without brand names • Not all brand names possess a distinct logo but many do • e.g., the Nike swoosh, Ralph Lauren’s Polo

11. (6) Packaging Decisions Color Design and Shape Physical Materials Product Information on Package

12. What is a Service? • “Any act that one party can offer to another that is essentially intangible and does not result in the ownership of anything. May or may not be tied to a physical product”

13. Major Categories U.S. Exports of Services Category Percentage Services Total 28.5 Travel (hotels, etc) 8.7 Transportation (fares, freight, and port services) 7.5 Commercial, professional, and technical services (advertising, accounting, legal, construction, engineering) 1.7 Financial services (banking and insurance) 1.5 Education and training services (most foreign student tuition) 1.0 Entertainment (movies, books, records) 0.8 Other categories (telecommunications, information, health care) 7.3 13-2 Irwin/McGraw-Hill Source: U.S. Department of Commerce, http://www.doc.gov. 2001

14. Service Marketing Decisions • Product Mix • Product Line • Brand Name • Logo • Store Layout

15. Types of Service Marketing Decisions Product Positioning

16. Montevideo, Uruguay

17. What is an Industrial Product? • Goods intended for industrial use, i.e. creating other goods & services • Materials & parts (enter manufacturer’s product completely, e.g. oil, lumber, tires, small motors) • Capital Items (long lasting, facilitate developing finished product, e.g. buildings, generators, lift trucks) • Supplies & business services (short lasting, e.g. pens, brooms, maintenance & repair services)

18. Major Categories U.S. Exports Industrial Category Percentage Merchandise Total 71.5 Food, feeds, and beverages (wheat, fruit, meat) 4.8 Industrial supplies (crude oil, plastics, chemicals, metals) 15.1 Capital goods (construction equipment, aircraft, computers telecommunication) 32.1 Automotive vehicles, engines, and part 7.7 Consumer goods (pharmaceuticals, tobacco, toys, clothing) 8.2 Other categories 3.6 13-3 Irwin/McGraw-Hill Source: U.S. Department of Commerce, http://www.doc.gov. 2001

19. To Standardize or Adapt Product/Service?That is the Question.

20. Products & Services for Consumers • Two Approaches for International Product Development • Adaptation – The strategy of altering products to meet the needs of local markets • Global Standardization – The standardization of products across markets & ultimately the standardization of the marketing mix worldwide

21. Global Standardization vs. Local Adaptation – “Continuum” • Continuum not “One or the other” • Global Standardization - “Ideal, theoretical” • Regional Standardization – uniform marketing within a particular region, EU • Globalize components, e.g. Brand Name, Logo, Image, Positioning, physical product,

22. Globalization “A little boy from Japan flies to the United States with his parents, and on the way in from the airport they pass the "miracle mile" most places have now. The little boy turns to his parents and says, "Hurray! They have McDonald's here in America too!"

23. Globalization • Braun (Gillette) sells kitchen appliances using same marketing mix across continents with minor mandatory adaptations (voltage, cycles)

24. Pro Globalization Arguments • Global Consumers – Needs of consumers are becoming more homogenous world wide • Global Brand Awareness facilitated by travel, communication, internet • Results in lower price due to standardized product research, economies of scale, promotion

25. Adaptation - Love Hotels in Japan You'll find "Love Hotels" all over Japan, places designed for folks to get together. The rooms offer a fantasy of luxury and escape from crowded tiny apartments where families or neighbors might spy on licit or illicit physical pleasures. You can tell the love hotels by their bright-lit neon signs with funny names, often English inflected: Hotel Elmer, Hotel Carrot, Hotel Charm, Hotel Princess, Hotel Chrystal. And the signs out front will list two or three prices: short stays, long stays, overnight stays. In the lobby, you won't see any people. Only a large room menu on the wall. If a photo of a room is lit up, the room is available. You like that room, press a button next to the photo. A faceless person behind dark glass hands you a key after you hand them your cash.

26. Love Hotel

27. Love Hotel Price Information Stay ¥ 4500 ($40)-- OPEN Rest ¥ 3600 ($30)-- CLOSE AM 10:00-PM 5:00 PM 3:00-PM 6:00 ¥ 2600 AM 10:00-PM 4:00 ($20)

28. Which Components of the Product May Require Adaptation? ● Core Component ▶ Physical Product ▶ Features ▶ Design *Positioning “Psychological” ● Packaging Component ▶ Style ▶ Brand Name ▶ Packaging ▶ Quality ▶ Labeling ▶ Price ▶ Trademarks ● Support Services Component ▶ Repair ▶ Warranties ▶ Maintenance ▶ Deliveries ▶ Instructions ▶ Spare Parts ▶ Installation 12-7 Irwin/McGraw-Hill

29. Alu-Fanny: French Foil wrap Crapsy Fruit: French cereal Kum Onit: German pencil sharpeners Plopp: Scandinavian chocolate Pschitt: French lemonade Atum Bom: Portuguese tuna Kack: Danish sweets Mukk: Italian yogurt Pocari Sweat: Japanese sport drink Poo: Argentine curry powder Would They Sell in the United States? 12-9 Irwin/McGraw-Hill

30. Adapt or Standardize? Shampoo Makes hair shiny, for normal hair,packaged in 400 gram size

31. How could this product be adapted to U.S.? • Product? • Package? • Support Services?

32. Services • Adaptation important because it involves people to people contact

33. Industrial Products • Industrial Products Require Less Adaptation • Industrial goods share similar buying motives worldwide • Industrial Products main U.S. export